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Rates Rebate/Overcharge

How to deal with large rebate spanning 7 years

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Sole Trader Client's year end is 31st July so y/e 2018 is still open and has not yet been submitted.
In April 2019 client received a £18,000  rates refund after complaining that the business rates for the past 7 years have been incorrectly charged. They had contacted a specialist firm to do this for them.  Their charge was around £6,000 plus VAT which is recoverable in this quarter's VAT Return.  Their business rates are now around £3,000 per annum.  What is the best way to show this in the P & L and Balance Sheet? Should it be in y/e 31st July 2018 or y/e 2019 when the refund was actually received.  Maybe reduce 2018 rate charge to what should have been charged and not what was actually charged? It will just look odd when doing the SA Return.  I will obviously explain in the white section                                                                  

Replies (10)

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RLI
By lionofludesch
26th May 2019 15:14

If it's definite, it goes in the 2018 accounts.

It might be an exceptional item - there's not enough detail to say,

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Replying to lionofludesch:
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By The Accountant
26th May 2019 16:35

What more detail do you require?

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Replying to The Accountant:
RLI
By lionofludesch
26th May 2019 16:55

None - it's up to you and the directors to judge whether it's material.

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Replying to lionofludesch:
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By The Accountant
26th May 2019 17:04

There are no directors. It is a sole trader.

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Replying to The Accountant:
RLI
By lionofludesch
26th May 2019 17:34

I missed that.

It doesn't change the fact that it's taxable in the July 2018 accounts - to the extent that the refund relates to the period before July 2018.

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By johngroganjga
26th May 2019 15:34

The whole refund is recognised in the first accounts you finalise after the refund is agreed.

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Replying to johngroganjga:
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By The Accountant
26th May 2019 16:37

So, show in the trading account?

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Replying to The Accountant:
By johngroganjga
26th May 2019 17:46

And in the balance sheet as a debtor, obviously.

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By atleastisoundknowledgable...
26th May 2019 17:28

In the 18 accounts have the £3k rates charge & a £15k exceptional item credit (if my maths is correct).

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By andrew1211
28th May 2019 10:18

White space ok but HMRC won't be fussed given it is more tax for them......

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